2 Growth Stocks to Buy and Hold Forever

Key Points

• MercadoLibre is a leading fintech and e-commerce company focused on the Latin American market.

• Spotify is dominating the audio streaming market and starting to see its profit margin expand.

• 10 stocks we like better than MercadoLibre ›

Buying and holding carefully chosen growth stocks with a long time horizon can be very rewarding. If you regularly buy shares in growing companies that are appealing to the masses, you're on your way to building wealth for retirement.

While it's difficult to call any investment a "forever" holding, since the future is always unknown with potential pitfalls, it's very difficult to imagine the world without the following services.

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1. MercadoLibre

MercadoLibre (NASDAQ: MELI) is the leading fintech provider for Latin American consumers. It offers an e-commerce marketplace and other financial services, including credit cards and mobile payments, that are driving substantial growth for investors. It has rarely seen its revenue growth dip below 30% over the last 10 years.

Latin America's e-commerce market is one of the fastest-growing in the world. Consistent with the enormous opportunity ahead of it, MercadoLibre's revenue grew 37% year over year in Q2 on a constant-currency basis, with the number of unique active buyers on its marketplace growing 25% over the year-ago quarter to over 70 million. This is still relatively low for a region with over 650 million people.

Expanding its product assortment and investing in improving the customer experience should unlock more growth. Management is expanding its fulfillment centers to increase shipping speed, which can have a direct impact on shopping frequency and widen its competitive lead in the region. It reported accelerating gross merchandise volume in Brazil and Mexico last quarter -- two of its top markets.

Another catalyst that should benefit the stock is improving margins. The net profit margin has increased from around 0% in 2020 to over 8% on a trailing-12-month basis. As margins improve, MercadoLibre can afford to offer even more benefits to consumers, such as free shipping, that drives more user engagement and sales volume.

Despite the company's consistent and robust growth, investors still price the stock at a big discount on a price-to-sales basis compared to where the stock traded before the pandemic. At 5 times trailing-12-month sales, the stock offers solid value right now and should outperform the broader market.

2. Spotify Technology

Spotify Technology (NYSE: SPOT) stock has rocketed higher over the past few years. This leading audio streaming platform is capitalizing on growing consumption for podcasts and music listening. While the stock's valuation might look expensive, it seems justified, as Spotify is still early in improving how it monetizes different services on its platform to improve profit margin.

Spotify is serving a global market that has a growing appetite for listening to music, audiobooks, or podcasts. It ended Q2 with 696 million monthly active users, with 276 million paying members on premium plans. That growing base of paying members fueled revenue growth of 15% year over year on a constant-currency basis.

Millions of people are finding value in Spotify and willing to pay to get ad-free listening. Premium memberships grew 12% over the year-ago quarter, indicating the growing value of Spotify's brand. Younger generations like Gen Z are spending more time streaming and listening to audio every day, according to Deloitte's 2025 Digital Media survey. This suggests there are opportunities for more growth.

Through most of its history as a publicly traded company, Spotify has reported a negative profit margin, but on a trailing-12-month basis, its net margin has improved to 4.76% relative to revenue. Operating income grew 53% year over year last quarter. Management sees an opportunity to squeeze more profit out of leveraging costs for customer service and payments, indicating that its earnings can grow at strong rates for several years to fuel the stock higher.

Spotify's dominance in the audio streaming market and improving margins make the stock a compelling investment. It's also investing in bringing users more personalization through artificial intelligence (AI), which helps strengthen its competitive advantage and should lead to attractive returns for long-term investors.

Should you invest $1,000 in MercadoLibre right now?

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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MercadoLibre and Spotify Technology. The Motley Fool has a disclosure policy.